History reveals time after time that it is the collapse in confidence in financial paper and fiat currency (i.e. the demand for each) which drives historic bouts of price inflation not so much coincident increase in supply; and certainly not robust economic activity, which is of course the overwhelmingly popular notion among cloistered academics. Fiat currency value, and financial paper pricing discounted flows of the same, is borne by nothing more than confidence/demand, the currency otherwise an IOU nothing in every practical sense.
As decades of monetary and fiscal distortion are inevitably wrung from the US financial system (and global) we should expect to see a dramatic collapse in confidence in fiat currency, along with associated paper, result in raging general price inflation for goods and collapsing financial paper prices in real terms. Purported financial "experts", including those at the Fed, will be left mystified by this inevitability, as usual.
Tangible assets offer refuge, particularly ultra liquid tangibles (i.e. precious metals), but don't linger in paper at this point. Collapsing financial markets are like burning buildings, with one key difference...to exit you must first find someone willing to take your place. You want to be out before that first whiff of smoke is detected by the masses.
Thoroughly enjoyed this post. The parallel connection and reality is the whole point. Thank you John! All should heed the wakeup call.
"Fiat Money Inflation in France" is a good followup to this story. A short mini book of about 70 pages. JMO
Yes! Read it. Quite interesting.
I love the first sentence you wrote for this historical story. It reminds me of a certain country today.
The deficit is about 6 Times worse in USA than in France.
So why waste and not write about the real problem?
Where would a man like Cantillon flee to today? Isn't every country on a debt-based fiat currency system?
Bernanke is the biggest culprit.
We're up to our eyebrows in culprits. Evasion is our MO.
History reveals time after time that it is the collapse in confidence in financial paper and fiat currency (i.e. the demand for each) which drives historic bouts of price inflation not so much coincident increase in supply; and certainly not robust economic activity, which is of course the overwhelmingly popular notion among cloistered academics. Fiat currency value, and financial paper pricing discounted flows of the same, is borne by nothing more than confidence/demand, the currency otherwise an IOU nothing in every practical sense.
As decades of monetary and fiscal distortion are inevitably wrung from the US financial system (and global) we should expect to see a dramatic collapse in confidence in fiat currency, along with associated paper, result in raging general price inflation for goods and collapsing financial paper prices in real terms. Purported financial "experts", including those at the Fed, will be left mystified by this inevitability, as usual.
Tangible assets offer refuge, particularly ultra liquid tangibles (i.e. precious metals), but don't linger in paper at this point. Collapsing financial markets are like burning buildings, with one key difference...to exit you must first find someone willing to take your place. You want to be out before that first whiff of smoke is detected by the masses.
thank you John for this very interesting story
i learned something new today.......yes i did........
i have heard the name John Law but didn't know the story.........thank you
is this story about Gold, or blockchain?
Law entered Paris around 1705......
Question answered?
Rational ignorance is a bitch…